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Updated over 7 years ago on . Most recent reply

Does paying off a HELOC qualify as a Roll Over for Tax Purposes?
I am a new to the forum and had a Real Estate / Tax Question.
I recently received an offer to buy out my 19% position in a commercial office building. I wanted to use at least part of the money to pay off my HELOC for my personal residence. I wanted to know if this would qualify as a Roll Over with the IRS. I wanted to make sure I wouldn't get hit with capital gains or some other issue that was unexpected.
Thanks in advance,
John Thomas
Most Popular Reply

- Accountant
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@John Thomas
It doesn't look like this qualifies for any preferential tax treatment.
What you are describing it to use the proceeds from a sale to pay off a personal debt. The Interest on the HELOC may be tax deductible(if used to purchase/improve personal residence) so you may be losing a tax deduction paying off the debt.
If you have the ownership in the commercial office building in your own name - you may be eligible to defer the gain doing a 1031 - like kind exchange.
If you have the ownership through a partnership interest - then you do not qualify to defer your gain.
- Basit Siddiqi
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